BlackBerry maker's CEOs hand reins to insider

Waterloo, January 23, 2012

Research In Motion's Mike Lazaridis and Jim Balsillie have bowed to investor pressure and resigned as co-CEOs, handing the top job to an insider with four years at the struggling BlackBerry maker.

Thorsten Heins, a former Siemens AG executive who has risen steadily through RIM's upper management ranks since joining the Canadian company in late 2007, took over as CEO on Saturday, RIM said on Sunday.

The shift ends the two-decade long partnership of Lazaridis and Balsillie atop a once-pioneering technology company that now struggles against Apple and Google.

With RIM's share price plummeting to eight-year lows, a flurry of speculation that RIM was up for sale has enveloped the company in recent months. But investors have pointed to the domineering presence of Lazaridis and Balsillie as one reason a sale would prove difficult.

Activist investors have clamored in recent months for a new, "transformational" leader who could revitalise RIM's product line and resuscitate its once cutting-edge image. It remains to be seen whether RIM has found such a leader in Heins, analysts said.

"It's the first positive thing that they have done in months," said Charter Equity analyst Ed Snyder, even as he expressed caution over the choice of Heins, a longtime lieutenant of Lazaridis and Balsillie. "My feeling is that it's a figure-head change."

Michael Urlocker, an analyst with GMP Securities, questioned whether Heins had the right background for the job that faces him. "I am not sure that an engineer as new CEO really gets to the central issues faced by RIM," he said.

Lazaridis and Balsillie also gave up their shared role as chairman of RIM's board. Barbara Stymiest, an independent board member who once headed the Toronto Stock Exchange, will take over in that capacity.

The pair, who together built Lazaridis' 1985 start-up into a global business with $20 billion in sales last year, have weathered a storm of criticism in recent years as Apple's iPhone and the army of devices powered by Google's innovative Android system eclipsed their email-focused BlackBerry.

"There comes a time in the growth of every successful company when the founders recognise the need to pass the baton to new leadership. Jim and I went to the board and told them that we thought that time was now," Lazaridis said in a hastily arranged interview at RIM's Waterloo headquarters, flanked by Balsillie and Heins and with Stymiest joining via telephone.

The executives were keen to paint the shuffle as an orderly transition on a succession plan mapped out at least a year ago, and not a retreat in the face of a plummeting share price, shrinking US market share and criticism of their products.

Both Lazaridis and Balsillie - two of RIM's three largest shareholders with more than 5 percent each - will remain board members, with Lazaridis keeping a particularly active role as vice-chair and head of a newly created innovation committee.

Lazaridis said he plans to buy an additional $50 million of RIM shares on the open market.

In the group interview announcing the change, Heins said his most immediate concern is to sell RIM's current lineup of BlackBerry 7 touchscreen devices, deliver on a promised software upgrade for its PlayBook tablet computer by February, and rally RIM's troops to launch the next-generation BlackBerry 10 phones later this year.

"Their problems are deep-rooted, and it's going to take time," Snyder said.

In the longer term, Heins, previously one of RIM's chief operating officers, said he would push for more rigorous product development and place greater emphasis on executing on the company's marketing and development plans.

"We need to get a bit more disciplined in our own processes," he said in a YouTube video posted by RIM. "We are great, innovative but sometimes we innovate too much while we are building a product."

Heins said RIM, which suffered a damaging outage of much of its network last year, has embarked on a global search for a chief marketing officer to improve advertising and other communication with consumers. Consumers now account for the majority of RIM's sales even though the BlackBerry built its reputation as a business tool.

For RIM critics, the focus on customers may seem long overdue. The company seemed blindsided by Apple's introduction of the iPhone in 2007 and was also slow to launch a competitor to the iPad. When its PlayBook tablet finally hit the market last spring, it was not equipped with RIM's trademark email service. The reviews were scathing, sales were anemic and the company has been forced to offer steep discounts.

Heins said it would be wrong of RIM to focus on licensing its software or integrated email package, a strategy that many analysts and investors have thought the company might pursue.

Even so, the new CEO said the company would certainly be open to discussions of that nature.

Neither Lazaridis nor Basillie detailed any future plans outside RIM, with Lazaridis particularly eager to point out his still-active role as a confidante to the new CEO.

Both have other interests outside of RIM. Lazaridis donated hundreds of millions of dollars to set up an independent theoretical physics institute and also a quantum computing institute attached to his alma mater, the University of Waterloo. Balsillie heads a think-tank in international governance and long dreamed of owning a National Hockey League franchise. – Reuters